A bullish reversal crashed the party on Friday, and as trading begins for the USD/INR this week, another move upwards has been displayed early. Traders who have been pursuing the bearish trend of the USD/INR may have anticipated a reversal higher, but the move may have been strong enough to knock speculative short wagers out of the game via stop losses.
Global risk appetite remains rather optimistic as this week of trading starts with many major equity indices still within higher territories. However, traders need to be keenly aware that international markets are entering the unofficial start to the holiday season in a wide variety of geographies, and because of this, transaction volume via financial institutions will begin to diminish. This essentially leaves the door open starting today until the first week of January is concluded for the potential of fast - and often confusing - results from assets including Forex.
The USD/INR has certainly enjoyed a solid mid-term bearish trend, but in the short term, speculators may suspect choppy conditions will prevail. However, the question likely being asked is: if a big move does happen, which direction will it be in? The tendency of the USD/INR has been to challenge support levels recently, but the end of trading late last week and the start of today is a stark reminder that trends can reverse.
Speculators may be tempted to look for downside momentum to ignite when resistance levels are tested short term, and this appears to be a logical decision via technical charts. Resistance near the 73.650 to 73.720 junctures may look attractive to place sell limit orders with the belief that, if touched, downward pressure will develop. Traders need to keep in mind that Forex volumes may not be large in the coming days and spikes may appear suddenly in the USD/INR.
Conditions near term in the USD/INR may produce quick reversals between support and resistance. However, traders should watch resistance levels carefully to see if they prove adequate, and if this proves to be the case, pursuing downward action remains attractive within the USD/INR. Speculators should be careful to use take profits within the Forex pair short term too, because if bearish momentum is achieved, its path may be vulnerable to sudden reversals higher.
Indian Rupee Short-Term Outlook:
- Current Resistance: 73.720
- Current Support: 73.530
- High Target: 73.820
- Low Target: 73.400
